Lawyers have warned it could take another seven years to legally establish any liability by the Royal Bank of Scotland for its role in the 2008 financial crisis and quantify any damages after a 14-week civil trial that begins today.
Disgraced former chief executive Fred Goodwin and other directors are in line for a public grilling at the High Court in London as part of a £700 million lawsuit brought by 9,000 retail investors and 18 institutions in the RBS Shareholder Action Group.
Mr Goodwin, who was stripped of his knighthood after the bank’s collapse, is due to answer questions on 8 and 9 June over the events leading up to the government’s £45.5 billion bailout nine years ago.
The legal action centres on a rights issue overseen by Mr Goodwin in April 2008 when RBS asked shareholders to pump £12bn into the bank after leading a consortium that spent £49bn on Dutch bank ABN Amro.
Investors claim they were left with hefty losses following the cash call after RBS shares plunged 90 per cent and the Government was forced to step in and rescue RBS.
Shareholders representing 87 per cent of the original £4bn damages claim, including large fund managers, have balked at the litigation costs and settled their case after RBS offered an £800m settlement.
The remaining claimants, including former and current RBS employees, represent a shareholder group which has been beset by internal wrangles, changing legal teams and questions over its funding and management structure.
Lawyers involved in the case say Mr Goodwin’s costs will be covered by RBS’s directors and officers liability insurance, so he will not be out of pocket whatever happens in the case. And because it is a civil case, the defendants would not face jail.
But Chris Roebuck, a visiting professor at London’s Cass Business School, said some shareholders wanted to see Mr Goodwin in court.
He said: “Society wants to hold someone to account. They still resent the fact no senior bankers went to jail for what happened during the financial crisis.”
Since leaving the bank, Mr Goodwin has struggled to find work and spends time playing golf and repairing vintage cars, according to friends.
But those hoping for a detailed account from him of the events of nine years ago might be disappointed.
“All the senior staff, including Goodwin, have tried to be as bland as possible,” said one lawyer in the case who has read Mr Goodwin’s witness statement.